Interviews

Name: Steve’s Job: Restart Apple (Cathy Booth)

Published in: Time Magazine

Date: Aug 18, 1997

Source URL: http://www.time.com/time/printout/0,8816,986849,00.html

Steve Jobs is sitting in the Apple boardroom. Actually, he is slouched like a teenager in one of the cushy leather chairs, his worn jogging shoes resting on the directors' table. The table is very long, very impressive--and very empty. Just Jobs here, wearing shorts and an impish grin. The old board of directors at Apple is history, he says. He's about to leave for Boston, where he'll make that news public, along with a far more dramatic announcement. One more thing, he says, feet still propped up on the executive woodwork--the company's headquarters in Cupertino, Calif., is history too. Eight stories of corporate excess are about to be abandoned. "I hate this building," says Jobs. "This building has come to symbolize everything that went wrong with Apple. It's about corporate hubris. Greed." This is not a building that can make "insanely great" computer products.

The rebel flag is flying over Apple Computer, Inc., again, thanks to Jobs. The Silicon Valley visionary who co-founded Apple in his father's garage in 1976, who launched the wildly successful Macintosh only to be booted by the corporate pinheads in 1985, is back running his first love. No, he's not the CEO, nor even chairman of the board. But until there's a new boss, Jobs is firmly at Apple's helm, and take it from us, the beleaguered company will never be the same. Take it too from the 1,600 Macintosh believers who gave him a standing ovation at the Macworld Expo in Boston last week, then booed, hissed and finally sat in shocked silence as Jobs announced that Apple's salvation would be a strategic alliance with none other than... Bill Gates of Microsoft.

Understand, the idea of Jobs returning to Apple is something akin to that of Luke Skywalker returning to fight what, until last week, cultists regarded as the evil empire. Gates, by comparison, was perceived as a dweeb Darth Vader, the billionaire bad guy who usurped the idea of the Macintosh's friendly point-and-click operating system for his now dominant Microsoft Windows.

Boo, hiss, a strategic alliance indeed. Is Jobs crazy? "Madman at the wheel, eh?" he said, laughing, as he walked off the stage in Boston.

American business has had its share of imaginative entrepreneurs, malevolent bosses, boardroom plotters who hatch late-night coups, strategic decision makers who make disastrous turns and heroic turnaround artists who restore corporate glory with breakthrough thinking and messianic zeal. Generally, that would describe more than one person. But Jobs is a one-man miniseries of capitalism whose ratings are rising again. Within hours of the announcement, Apple stock soared 33% to $26.31. Sipping a celebratory water on the plane ride home, Jobs pointed out that people had been so shocked they missed the big news: Microsoft would be paying an undisclosed amount to settle claims that it had used seminal Apple computer patents. "Three or four weeks ago," said Jobs, "I called Bill and said Microsoft and Apple should work more closely together, but we have this issue to resolve, this intellectual-property dispute. Let's resolve it." With Jobs' no-nonsense negotiating, it was done quickly, with Gates not only promising to pay off Apple but even investing $150 million in nonvoting Apple stock. The rebels can now withdraw to their original "campus" in Cupertino--the one without the fancy boardroom--and live on to fight another day.

The tale of Steve Jobs has long been a Silicon Valley legend. It was Jobs who, as a long-haired and barefoot twentysomething, set in motion the revolution called the personal computer by making it "user friendly" to the masses. Jobs didn't invent the machine; his partner Steve Wozniak was the real engineer. But Jobs understood before anyone else the key to transforming the computer from a geek's expensive toy into a household appliance. Instead of writing commands in computerese, Macintosh owners used a mouse to point and click on easily identifiable icons on the screen--a trash can and a file folder. Jobs also paired the laser printer with the computer, thus sparking the desktop-publishing revolution. "We started out to get a computer in the hands of everyday people, and we succeeded beyond our wildest dreams," laughs Jobs.

Jobs is intimidating at first. He has, after all, been portrayed as an abusive monster, and countless colleagues attest to his arrogance and intolerance. But now, even during the week of the highest stress he has faced in years, he exudes his other side: the Zen-like calm and the impish aura that make him so different from his arch friend and arch rival Gates, a man of competitive intensity and analytical rigor. This Jobs literally lopes into the room, and he keeps using the word golly. So O.K., golly, it's true that the famed "Reality Distortion Field"--that renowned Jobsian ability to bamboozle and bedazzle--still works, but it's a slower seduction these days, not a manic pitch. At 42, he may have mellowed, but as a motivator and marketer he still has no equal.

The adopted son of working-class parents, Jobs became a millionaire by age 25, an American icon by age 30 and corporate history the same year, all thanks to Apple. It would be easy to read his return--12 years after he was booted by the board--as a moment of sweet revenge. But for Jobs, who grew up idolizing the Hewlett-Packard ideal of an egalitarian workplace where ideas came before hierarchy, returning to Apple is something akin to rescuing a son before he loses himself to booze and bad company. There has been a literal deathwatch on Apple in recent weeks. It had sales of $9.8 billion last year, but revenues have dropped significantly in 1997. Losses have mounted--more than $1.5 billion over 18 months. Jobs prefers to see hope in the 20 million to 25 million users who remain. He even has a hard time uttering the D word. "Apple has some tremendous assets, but I believe without some attention, the company could, could, could--I'm searching for the right word--could, could..." He pauses and gives in: "die."

All last week, Jobs allowed TIME to follow him as he negotiated his detente with Gates and prepared for the Boston meeting, then headed back to California to work at what he calls his "preferred squeeze"--Pixar Animation Studios, the Jobs company that created the 1995 hit movie Toy Story, the first animated feature film made entirely by computer. Pixar represents pure creation, a whole new era of entertainment that blends good storytelling with computers. "It's so fun at Pixar," he says, reveling in his new role as Hollywood mogul on the make. Apple, on the other hand, requires heavy lifting. "It's like turning a big tanker. There were a lot of lousy deals that we're undoing."

So why go back to a company that has ejected CEOs like so many bad diskettes? "I wouldn't be honest if some days I didn't question whether I made the right decision in getting involved," he says. "But I believe life is an intelligent thing--that things aren't random." In other words, there's a reason why his path has crossed Apple's again. A chance to pay penance? Or perhaps to prove he has grown up.

On Monday, two days before the fateful announcement, Jobs has the run of Apple headquarters. Most of the executive suites are already empty, their inhabitants gone to Macworld or just plain gone. Apple's management ranks have been thinning at an alarming rate. Only Fred Anderson, the chief financial officer, is roaming the halls as Jobs negotiates with Microsoft by phone and works on a quickie video of the new Apple board he virtually handpicked--naturally to include his buddy, Oracle chief Lawrence Ellison, who considered his own takeover bid of Apple this spring. "We caught Larry Ellison in the San Jose airport last Friday before he left for vacation," says Jobs, chuckling, as he watches raw video footage in the boardroom. "Apple is the only life-style brand in the computer industry," Ellison is saying onscreen. "It's the only company people feel passionate about. My company, Oracle, is huge; IBM is huge; Microsoft is huge; but no one has incredible emotions with our companies." Jobs is pleased.

All day long, the de facto helmsman races in and out, trying out bits of his Wednesday speech. He is aware of the naysaying, that Apple, with its single-digit market share, is doomed to fall before the Goliath of Microsoft. At Macworld, he will stress instead Apple's domination of education and desktop publishing. He fiddles with a paper clip as he thinks out loud.

"What if Apple didn't exist? Think about it. TIME wouldn't get published next week. Some 70% of the newspapers in the U.S. wouldn't publish tomorrow morning. Some 60% of the kids wouldn't have computers; 64% of the teachers wouldn't have computers. More than half the Websites created on Macs wouldn't exist," he says. "So there's something worth saving here. See?"

Painful as it is for a founding father, he keeps up daily with the rumbles about Apple on the Internet, the world's most extensive gossip mill. The chatter is of proxy fights and takeovers, the frustrations vented by clonemakers and Mac users alike. He understands; he really does. He gave up on Apple himself just two months ago and unloaded the 1.5 million shares he got as part of the $424 million Apple paid him for NeXT Software Inc. last December. "Yes, I sold the shares," he says. "I pretty much had given up hope that the Apple board was going to do anything. I didn't think the stock was going up." He ruefully notes that he sold them in June when the price was around $15 a share, about $16 million less than they'd be worth now. Today he holds a symbolic one share of Apple--and is unapologetic about not holding more. "If that upsets employees," he says, "I'm perfectly happy to go home to Pixar."

Within weeks of his sale, of course, the board ousted CEO Gilbert Amelio after 17 months on the job. Jobs says the board came to him and offered him both the CEO's and chairman's job. "I thought about it," he admits, "but decided it wasn't what I wanted to do with my life." Taking the chairman's job, in particular, he said would "scare away" any real candidate for the CEO's job, given Jobs' penchant for down-your-throat management. Yet it may not be much better for the new CEO to have him sitting on the board, especially the reconstituted activist board of Jobs allies that he hopes will keep Apple on the right path. "I've agreed to be a board member, and that's all I can give. I have another life now."

The Steve Jobs who is currently running two sophisticated companies lives in a turn-of-the- century English-style country house in Palo Alto with his wife Laurene, 33, their two young children and his 19-year-old daughter Lisa, home from college for the summer. The house is run with a distinct 1960s flavor. Laurene has planted a garden of wildflowers, herbs and vegetables all around. The rooms are sparsely decorated, the only extravagances being Ansel Adams photographs. We dine as the Jobses always do: both are strict vegans, eating no meat products. Dinner is pasta with raw tomatoes, fresh raw corn from the garden, steamed cauliflower and a salad of raw shredded carrots. While the adults eat, their six-year-old son picks lemon verbena and other herbs in the garden for the after-dinner tea. His reward is a tickle and being tucked into bed by Dad.

Over dinner, Jobs tells how Laurene overloaded his circuits eight years ago while he was speaking at nearby Stanford University. "I couldn't take my eyes off her," he says of the brainy blond M.B.A. He "bagged" a business dinner to be with her, he says, and they've been together ever since. Conversation is a mix of politics, Laurene's work setting up a mentor group for a nearby high school and tales of a presidential visit last summer when Bill Clinton rang up and invited himself to dinner so he could meet with Silicon Valley executives. "We had to rent a Dumpster to clean out the house before they came!" says Jobs, whose prenuptial housing style was "spare," if that's the term for lacking furniture. The couple giggle over their search for cheap wine glasses to serve the President. The menu was, naturally, vegan.

Tuesday Jobs heads for Boston, traveling commercial, albeit first class. Once there, he surveys the Castle, a puny downtown venue chosen months ago for what was expected to be a snoozer of a speech to Mac enthusiasts by Amelio. Jobs has assembled an army of showmen to orchestrate his- -and Apple's--return to competition. There is theatrical lighting and a concert-quality sound system. He stares at the mega columns with the Apple logo cut into them, grimaces at their "Hitlerish" appearance, but decides it's too late to do anything about them. Then he sets to work on his slide-show presentation--run from an IBM ThinkPad. The software, thank heaven, is from his old company, NeXT.

Less than 12 hours before his big announcement, nobody here knows yet about the bombshell to come. In fact, Jobs is still negotiating it here at the Castle--on a cell phone. "Hi, Bill," you hear him say in the echo chamber of the old hall. Then his voice drops, and for nearly an hour he paces the stage, running through last-minute details with Gates. All the while, he leans over his computer, paces, lies down on the stage, paces, lurks in dark corners, paces and talks, paces and talks.

This is the fateful call for the boy titans of the personal-computer revolution, meant to settle the war. At one point, talking about Apple, Jobs says, "There are a lot of good things, happily--and a lot of screwed-up things." Then, to his crew, he yells, "Have we got satellite contact with the other side?" Assured this has been taken care of, he answers a question from Gates about what to wear on the morrow ("I'm just going to wear a white shirt," he assures him), and he finally ends the conversation with a heartfelt "Thank you for your support of this company. I think the world's a better place for it." And so that's how Apple and Microsoft, Steve Jobs and Bill Gates, finally seal it--on a cell-phone call.

The deal is vintage Jobs. Amelio began the process of repairing relations between the two longtime rivals. But once he was out the door at Apple, Jobs contacted Gates to try to get talks started again. Gates dispatched his CFO, Gregory Maffei, who met Jobs at his home. Jobs suggested they go for a walk. Grabbing a couple of bottles of mineral water from the fridge, the two took off for a stroll around Palo Alto. Jobs was barefoot. "It was an interesting scene," Maffei recalls. "It was a pretty radical change for the relations between the two companies." The two walked for nearly an hour, through Palo Alto's green university area, as they pounded out the details of a potential deal. Jobs, Maffei says, was "expansive and charming. He said, 'These are things that we care about and that matter.' And that let us cut down the list. We had spent a lot of time with Amelio, and they had a lot of ideas that were nonstarters. Jobs had a lot more ability. He didn't ask for 23,000 terms. He looked at the whole picture, figured about what he needed. And we figured he had the credibility to bring the Apple people around and sell the deal."

That credibility would be tested as Jobs delivered the speech to the faithful. And then he was there, on the giant screen. Gates appeared, amid boos and hisses, to announce that Microsoft would invest in and cooperate with Apple. Jobs is disappointed by the "childish behavior" of those who booed. "I'm sure some people want to cling to old identities. I was a little disappointed at the unprofessional reaction. On the one hand, people are dying to get the latest release of Microsoft Office on their Macs, and on the other hand, they're booing the CEO of the company that puts it out. It seems really stupid to me." He adds, "Apple has to move beyond the point of view that for Apple to win, Microsoft has to lose."

Until a new CEO is on board, Jobs is up to his trim 35-in.-waist jeans in determining Apple's future. "I'm here almost every day," he said, sitting in the boardroom last week, "but just for the next few months. I'm really clear on it." His position is fairly critical to the company's success, according to Edgar Woolard Jr., chairman of E.I. DuPont and one of only two board members who survived the latest assault. "It's conceivable Apple could turn around without Steve, but the probability goes up significantly with Steve. Steve is noted for his intellect and vision, but he can also bring a spirit of enthusiasm to users and employees alike."

He can also buy that spirit. To restore morale, Jobs says, he went to the mat with the old board to lower the price of incentive stock options, which had become virtually worthless as the share price sagged. In Silicon Valley, where job opportunities are as common as Porsches, stock options are crucial to retain employees. When the board members resisted, he pushed for their resignations. Jobs repriced the option at $13.25. Apple employees have already made 100%.

There's not one area of Apple that doesn't bear Jobs' fingerprints. Take product development. "We've reviewed the road map of new products and axed more than 70% of the projects, keeping the 30% that were gems. Plus we're adding new ones that are a whole new paradigm of looking at computers," he says. "The product teams at Apple are very excited. There's so much low-hanging fruit, it's easy to turn around."

Next on the list is Apple's fuzzy marketing message. (Quick: Can you think of it?) Jobs dismissed Apple's ad agency and held a "bake-off" for the account among three firms. The winner was TBWA Chiat/Day, the company that created Apple's legendary 1984 Super Bowl ad (only to be fired). Jobs is wildly enthusiastic about the new ad, which features the theme "Think Differently," but when he plays it for his inner team at the Castle Tuesday night, the group nixes it as not ready for prime time. Look for it soon, however. "There's a germ of a brilliant idea there," Jobs rhapsodizes.

The key, Jobs believes, is to take advantage of the Apple brand itself. "What are the great brands? Levis, Coke, Disney, Nike. Most people would put Apple in that category," he says. "You could spend billions of dollars building a brand not as good as Apple. Yet Apple hasn't been doing anything with this incredible asset. What is Apple, after all? Apple is about people who think 'outside the box,' people who want to use computers to help them change the world, to help them create things that make a difference, and not just to get a job done."

Although many computer wonks still think Apple is too tempting for Jobs to resist, the truth is that he's been much better at building new companies than running existing ones. Pixar, his latest love, is taking off. Eleven years ago, he clicked his mouse on the Hollywood icon and bought Pixar from Star Wars director George Lucas. He has dumped upwards of $55 million of his own money into the venture and fairly burbles with that famed charisma over his new mission: marrying Silicon Valley technology to Hollywood's creative genius. His studio became the first--besides Disney--to hit it big with an animated movie, Toy Story, which cleared a respectable $37 million for the fledgling studio. Jobs owns 60% of Pixar, which is valued at anywhere from $700 million to $800 million.

Just entering the door at Pixar's headquarters in the San Francisco suburb of Richmond tells you all you need to know about the difference in cultures between Pixar and Apple. Pixar is what Apple used to be: cool. Everybody's office here is the same size, even Jobs'. He's in shorts; so is everybody else.

During our visit, Toy Story's Academy Award-winning director, John Lasseter, is excited about a "bug cam" the size of a matchbook. It was designed on a lark by Pixar engineers to photograph real bugs for A Bug's Life, the first in Pixar's five-picture deal with Disney. The hallways are crawling with pictures of exotic bugs and plants that will eventually populate the movie. "It's way cool working here," says Lasseter. "The atmosphere is fun. We respect creative people and make them feel satisfied."

Musing on the differences between the computer biz and the animation biz, Jobs notes, "Look, you work on a technical product, and if you're really lucky, it ships. If you're really, really lucky, it's a hit and lasts a year. If you're in the pantheon of products it lasts a decade, then it rapidly becomes a sediment layer on which the next layer of technology is built. I don't think you'll be able to boot up any computer today in 20 years."

On the other hand, animated films have an infinite life cycle. "Snow White has sold 28 million copies, and it's a 60-year-old production," Jobs points out. "People don't read Herodotus or Homer to their kids anymore, but everybody watches movies. These are our myths today. Disney puts those myths into our culture, and hopefully Pixar will too. At Pixar we're just getting started, and it's very magical. It's like the computer industry was in the early days."

Jobs is working hard to make Pixar a brand name as powerful as Disney's. Michael Eisner, head of Disney, says he doesn't even think of the two companies as separate anymore. "We are joined at the hip, at the computer and at the soul," he told TIME. "Pixar's success is not a fluke. One thing I always think is essential is enthusiasm, and Steve Jobs is massively enthusiastic. Jobs' bravado is his charm. He's a serious businessman, but he's out there with his charisma. It's fun to be with him."

Unlike Apple, Pixar is expanding, having gone from 175 people to 375 this year alone. The original Richmond studio now has an outpost working busily on a direct-to-video sequel to Toy Story, and here's a mysterious third major project in the works too. Jobs has plans for a new studio, to prawl on 16 acres in industrial Emeryville, near Berkeley. Interior plans have been carefully drawn--before the exterior--to ensure a cross-pollination of ideas. And of course, he says, all the offices will be the same size.

For the next few months, however, Steve Jobs' main job will be Apple. The Microsoft Death Star may be rotating in friendly orbit, but Jobs must still find a new leader for the Mac troops. Then he can resume being a Hollywood mogul and a model dad, right? Even after this amazing week, Jobs insists he will pass the diskette to a new generation and then stand aside to let it run the program. But Apple is his first child, and you know how hard it is to let the first child go. Watch for the sequel here.

With reporting by David S. Jackson/San Francisco and Valerie Marchant/New York